Understand everything about NFT, these virtual tokens that sell for several million euros

This secure exchange system opens up a new dimension for collectors, but with a little subtlety: the title deed is often much more important than the object itself.


 

The system raises eyebrows, but it fascinates more and more investors. NFTs, for non-fungible tokens (non-fungible tokens, in French) offer a new way to sell and buy on the internet. These virtual tokens make it possible in particular to acquire entirely digital “objects”, which one cannot therefore see or touch, but quite possess and resell. An unprecedented auction is also taking place, Thursday, May 20, in Brussels (Belgium), with 13 works offered in the form of NFT.

“It’s like buying an item in a store, but what really mattered to you was the credit card ticket, sums up Fabrice Starzinskas, head of the Digital Creation department at the Ecole supérieure du digital in Paris. “It changes a lot of things”, he smiles. After their sensational entry into the world of art, but also of sport and video games, will NFTs soon be part of our daily lives? Franceinfo has ventured into this digital breach.

How do NFTs work?

NFTs are like a single digital contract, which is recorded in a secure ledger. In the art world, for example, this technology considerably improves the traceability of a work, proving that it is authentic and that it really belongs to its owner. A system that could, in the future, resolve many disputes between experts.

To create such a token, it must be entered in a somewhat specific register, a storage technology called blockchain. This decentralized network keeps in mind all the changes made to it. “He is a trusted third party, like a notary, details Fabrice Starzinskas. Except that here, it’s as if everyone had the notary’s register accessible in their room. If the lawyer moves or disappears, we don’t care, because there are copies everywhere. ” The creation of an NFT has a name, the minting (“Typing”, in French), and takes place on specialized platforms such as the Mintable, Foundation or OpenSea sites, for a fee that sometimes exceeds a hundred euros.

What can you buy or sell using NFTs?

The possibilities of exchanges are almost unlimited, because these contracts can relate to physical works, such as paintings or sculptures, as well as entirely digital creations: one speaks then of “crypto art”. It is therefore possible to become the owner of an image in jpeg format, of music in MP3 or even to collect videos showing great sports moments, for example. And regardless of whether copies of these files exist or circulate on the web, the NFT guarantees that only one person officially owns the work in question.

“At first, I had trouble understanding the principle of selling a completely digital file, breathes Joanie Lemercier, visual artist based in Brussels. But with these security certificates, the buyer is verified and can then resell the work on a secondary market. The creator can also collect royalties each time the NFT changes hands, if this is specified in the contract. ” A doubt persists: how can we be sure that an artist will not sell the same work twice thanks to this system? “It’s no different from a direct sale or a gallery sale, assures Joanie Lermercier. When I produce a work, in six editions for example, I undertake not to make a seventh or an eighth. ”

Until last year, NFTs were mainly known to cryptocurrency specialists, but in March a record sale rocked the contemporary art market: the auction for $ 69.3 million of a work by the American artist Beeple, a digital collage baptized Everydays : The First 5 000 Days. A few weeks later, the enigmatic artist Pak raised several million dollars by selling a series of NFTs through the famous auction house Sotheby’s, including a puzzling work: a single pixel, auctioned for 1.36 million dollars after 90 minutes of online auction.

Is this technology reserved for the art market?

If artists are particularly passionate about NFTs, these tokens are appearing in other sectors of the digital economy, such as video games. “Whether for bonuses in mobile games, purely cosmetic modifications in games like Fortnite or Counter-Strike, lists Fabrice Starzinskas, people are already spending a lot on virtual items. ” For publishers, the possibilities of exclusive sales, of unique characters or accessories, for example, open up attractive prospects.

The contract symbolized by the NFTs can go even further. At the end of March, Twitter CEO Jack Dorsey sold his very first tweet for $ 2.9 million, a message visible to the world. But who now has an owner. On April 2, an American couple registered their marriage * in the blockchain, by exchanging two NFTs linked to the same virtual work called “Tabaat”, which means “ring” in Hebrew.

Equally astonishing, Oleksandra Oliynykova, a professional tennis player ranked beyond 600th in the world, has put her right arm * up for sale as an NFT. The sportswoman indeed undertakes to let the buyer choose a final tattoo that will be visible during his future matches.

In this matter, the field of possibilities seems endless. “I can take a screenshot of our Zoom interview and then sell it, smiles Fabrice Starzinskas. The only limit is the imagination or the artistic discourse behind.”

Is investing in NFTs risky?

From the rank of confidential technology to the halls of the largest auction houses, these virtual tokens are attracting investors from all walks of life and experiencing spectacular growth. In the first quarter of 2021, NFT sales would have exceeded two billion dollars, according to a report by the specialist site NonFungible. A welcome windfall for artists, whose activity has been limited since early 2020.

“In a context of a pandemic, artists are the first to be fired, emphasizes Fabrice Starzinskas, so if they can sell a jpeg image that pays them three months rent, they take the plunge. Whether physical or virtual, art also confirms its status as a safe haven. “It’s a drift of capitalism, adds artist Joanie Lemercier. The primary interest of many buyers is the creation of monetary value. ”

Several celebrities have already seized on the NFT phenomenon, like American heiress Paris Hilton, who sold her latest creation for over a million dollars in this form. As for the buyers of Beeple’s work at $ 69.3 million, they are none other than Indian investors who made a fortune … in NFTs.

For Joanie Lemercier, the craze around these tokens looks like a speculative bubble, promised a risk of implosion. “We know that this price increase and this sales boom will have a very short lifespan., analyzes the artist. But in the long term, are we going to return to prices that are a little more reasonable and develop a new economic model for artists? This is the question we all ask ourselves. ”

The sustainability of the system also has its share of questions. “In a gold rush, the only ones who are sure to make money are those who sell shovels”, quips Fabrice Starzinskas. NFTs are a profitable business for the creators of trading platforms and their intermediaries, which can however have significant fixed costs. Because the blockchain virtual infrastructure is “Hard” : computers which must be managed and secured, and which are above all very greedy in electricity.

“I realized that the edition of only six NFTs had a power consumption equal to three years of consumption of my studio., reveals Joanie Lemercier, with all the video projectors or computers that I use every day.” Faced with this observation, the artist decided to “Pause everything”And is now interested in more ecological and affordable platforms.

* All the articles to which these links refer are in English.





 

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